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Strategic exploitation of a common resource under environmental risk

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  • Fesselmeyer, Eric
  • Santugini, Marc

Abstract

We study the effect of environmental risk on the extraction of a common resource. Using a dynamic and non-cooperative game in which an environmental event impacts the renewability and the quality of the resource, we show that the anticipation of such an event has an ambiguous effect on extraction and the tragedy of the commons. A risk of a reduction in the renewability induces the agents to extract less today while a risk of a deterioration in the quality has the opposite effect. Moreover, when environmental risk induces conservation, the tragedy of the commons is worsened.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 37 (2013)
Issue (Month): 1 ()
Pages: 125-136

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Handle: RePEc:eee:dyncon:v:37:y:2013:i:1:p:125-136

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Web page: http://www.elsevier.com/locate/jedc

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Keywords: Conservation; Dynamic games; Environmental risk; Renewable resources; Tragedy of the commons;

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Cited by:
  1. Agbo, Maxime, 2014. "Strategic exploitation with learning and heterogeneous beliefs," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 126-140.

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